Soaring gold price helps H&T Pawnbrokers to glittering £3.7m profit
The owner of the country's biggest pawnbroker said the recent gold price boom helped send half-year profits surging.
H&T group, which trades as H&T Pawnbrokers and was established in 1897, posted a 42.3% jump in pre-tax profits to £3.7 million for the first six months of the year as it saw the price of gold leap by nearly 8%.
Demand for gold has been sent rocketing worldwide as investors look for safe haven assets amid uncertainty created by the Brexit vote as well the US election and negative interest rates in many countries.
The collapse in the value of the pound after the UK's decision to quit the EU has pushed gold prices even higher, with figures recently revealing the price of the yellow metal has soared 45% so far this year in sterling terms.
H&T said if the gold rush continues over the rest of the year, its second-half profits will also be given a boost.
The leap in first-half profit came as the company also delivered an 85% rise in its personal loan book, while it saw robust trading in its foreign exchange service and "we buy anything" buyback offering.
H&T said the rising gold price was helping the group weather tough market conditions, with pawnbrokers hit in recent years by intense competition and as gold jewellery has fallen out of favour.
Chief executive John Nichols said: "This is a promising start to the year in the face of challenging trading conditions, with a strong operational performance aided by favourable market conditions around the gold price.
"The continued growth in our personal loans products and the recent increases in gold price, if sustained, will benefit the group during the second half of the year."
H&T said the average sterling gold price was £852 per troy ounce in the first half, up from £791 a year earlier, while it had soared since then to £1,017 in July.
The group's profits from pawnbroking scrap rose to £600,000 from £100,000 a year ago thanks to the gold price hike, which also benefited its gold buying earnings, at £1.5 million against £1 million a year earlier.
But the firm said the rise in gold buying earnings would ease back as it pays more in store as market prices stabilise.
It also hailed its personal loan business as a "significant opportunity" as profits in the division rose by a quarter to £1.5 million.
The personal loans service, which lends up to £2,500 for up to three years, was launched in 2014 to boost profits as its pawnbroking division came under pressure.